RETAIL RESEARCH HOTELS & RETAIL

LUXURY HOTELS & RETAIL: The ideal commercial mix

PARIS: A reference point in rental growth

CENTRAL ´S transformation

KNIGHTFRANK.ES | 1 RESEARCH HOTELS & RETAIL

HOTELS & RETAIL

Pablo Párraga Head of Retail [email protected] +34 600 919 078

Elaine Beachill Director of Retail Capital Markets and Flagships [email protected] Introduction +34 600 919 016

Brynn Evans We are delighted to present this report, in which we share our analysis, Senior Consultant Retail Capital Markets insight and opinions on the trends shaping Madrid´s retail landscape. and Flagships [email protected] +34 600 919 129 Drawing on the retail expertise of our Pan-European network, we have specifically focussed on Madrid Tamara Sánchez and to explore the relationship between tourism Senior Consultant Retail Capital Markets generated by luxury and 5-star hotels and the evolution and Flagships of prime retail landscapes. The Madrid retail market is constantly evolving and the current developments [email protected] in the city centre mean there are exciting times ahead +34 600 919 073 for both retail operators and investors. Knight Frank remains at the forefront of Flagship retail. We hope Jasper Henson you find this report thought-provoking and enjoy Consultant Retail Capital Markets reading it as much as we enjoyed compiling it. and Flagships Elaine Beachill [email protected] Director of Retail +34 600 919 108 Capital Markets and Flagships Rosa Uriol Director of Research [email protected] +34 600 919 114

Laura García Consultant of Research [email protected] The increase in quality and quantity of tourism +34 600 919 113 over the next 18 months will directly and positively impact Flagship retail in Madrid.

Cover: Centro Canalejas Madrid, which will be home to the Four Seasons hotel

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Hotels & retail

New luxury hotel openings and refurbishments drive up the retail offering in the surrounding area, drawing in high-end brands eager to tap into the increased number of potential customers that fit their target public

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THE GLOBAL IMPACT OF TOURISM TOP 10 COUNTRIES FOR LUXURY TOURISM GDP AND EMPLOYMENT NO. OF LUXURY HOTELS

1. United States 1,203

2. 237 10.4OF THE WORLD GDP 3. United Kindom 189 1 IN EVERY 10 JOBS AROUND THE WORLD IS 4. China 168 RELATED TO TOURISM AND TRAVELLING 5. 168

Source: World Travel & Tourism Council. Travel & Tourism 6. Mexico 161 Economic Impact 2018. World. 7. Thailand 135

8. Spain 124

otels and retailers have always gone Europe boasts a very 9. Canada 114 hand-in-hand, and with tourism pro- strong hotel supply. viding retailers with one of the main Four of the world’s 10. India 106 sources of customers, many opt to Hopen stores near to hotels. top 10 countries with the highest number of Source: Five Star Alliance Five-star hotels act as a magnet for high-end brands luxury hotels are european. looking for unique locations. While retailers help bring a more stable and higher quality tourism to the area, attracting more affluent tourists who not only buy bigger ticket items and consume more goods and services, but also have longer average stays.

Europe boasts a very strong hotel supply. Four of the world’s top 10 countries with the highest number of luxury hotels are European, a rather re- markable figure considering the other countries in the ranking are much larger (with the exception of Thailand).

European cities are established as go-to luxury tourism destinations, with new and improved ho- tels opening up in the most exclusive areas of cities AVERAGE STAY IN SPAIN’S HOTELS all across Europe. Longstanding hotels are no ex- In some European cities such as Paris, a wave of BY CATEGORY ception to this trend, with many closing for refur- high quality hotel openings have helped draw more AVERAGE NO. OF DAYS. 2018 JAN-SEP. bishment. high-end retailers to the area, pushing up the rental While another strategy that is proving popular prices of retail units on the streets neighbouring the 3.56 3.50 3.42 among hotel operators is to repurpose emblematic hotels. However, the closure of an emblematic ho- properties into luxury hotels to ensure guests can tel has the revere effect on its neighbouring streets, 2.34 Above: 2.17 enjoy a truly memorable stay. Preserving a proper- causing retailer rotation to decline and rental in- Centro Canalejas Madrid, ty’s historical and unique features in order to make creases to slow. which will be home to the Four Seasons hotel them part of the guest experience adds extra value With this trend in mind, the current wave of luxury to the overall service offered. hotel openings and refurbishments in Madrid is set Left: to have very positive repercussions for the city cen- Hôtel Barrière Le Fouquet’s 5* 4* 3* 2* 1* Paris tre’s retail units. Source: INE. Hotel Occupancy Survey.

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Partnerships between hotels and major retailers

Retailers are no longer just interested in opening physical stores, they are opening restaurants, teaming up with luxury hotels and can now be found in any space that offers its customers a unique experience

he most prestigious hotels in the TOP HOTELS FASHION BRANDS world are improving their design and retail services in a bid to win over their guests who are becoming increasingly demandingT and expecting ever-higher stand- , , BALI, ards. As such, they are focusing on offering new BVLGARI , , SHANGHAI experiences that appeal to all the senses as part UPCOMING OPENINGS: of a wholly unique service. 488 ROOMS , PARIS, TOKYO Today’s guests are not just looking for quality accommodation in which they can stay, they are also looking for a hotel that goes the extra mile VERSACE to offer them just that bit more to ensure their GOLD COAST stay is a truly memorable experience. Design, ar- 415 (AUSTRALIA), DUBAI chitecture and decor are key, not only to provide ROOMS a good hotel service, but also to create that all- important experience to remember.

In order to create unique and luxurious spaces, GIORGIO ARMANI some major hotel chains have joined forces with MILAN, DUBAI the world’s most influential contemporary de- 255 ROOMS signers who are leaving their mark on emblem- atic hotels all over the world. Some designers such as Óscar de la Renta, Diane von Fursten- berg, Salvatore Ferragamo, Christian Lacroix, CAMPER Ralph Lauren and have teamed , BERLIN up with different operators to design and deco- 76 ROOMS rate some of their most iconic hotels. The con- tributions of these designers are a major draw for the loyal followers of these brands. MOSCHINO For 34 years Coco Chanel lived in the suite at MILAN Paris’ Ritz Hotel, the suite which now bears her 65 name and retains her unmistakable essence. ROOMS Over the years she gradually adapted its décor and style to her tastes, and today the luxury of staying in the suite is reserved for the wealthiest Right: of guests (with prices starting from €25,000 per Karl Lagerfeld. Hotel Crillon night). Paris

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Retailers have identified the potential of the hotel sector as a means of diversification. Trusting in a blend of creativity, style, comfort and good taste, they have forged partnerships with major hotel chains. For instance, in 2016 Tommy Hilfiger acquired the Raleigh hotel in to convert it into a luxury hotel-bou- tique where, by paying an annual fee, mem- bers can gain priority for reservations and use the hotel’s services.

Other brands have gone one step further, extending their own brand throughout the hotel market. Bvlgari has been a trailblazer in this regard, after opening its first hotel in Mi- lan in 2004, it created its own brand, Bvlgari Hotels & Resorts, which can now be found in London, Bali, Beijing, Dubai and Shanghai, with openings planned for Moscow and Paris in 2020 and Tokyo in 2022.

The Palazzo Versace Gold Coast, located on Australia’s Gold Coast, was designed by Gi- anni Versace to express the luxury, glamour, sophistication and class offered by this fash- ion brand in the form of a six-star hotel. Above: LVMH group expands with Cheval Blanc ho- Coco Chanel tels opening in Courchevel, Saint-Barthélé- Suite Hotel Ritz my and the Maldives, in addition to those Paris planned for 2020 in Paris and Bali. Right: Armani’s two hotels invite guests to “Stay Diane von Furtensberg Hotel Claridge’s with Armani”. The first, located in the iconic London Burj Khalifa building, the tallest tower in the world, is directly connected to the largest shopping centre in the world, the Dubai Mall. While the second, in Milan, the heart of the The so-called kaiser of fashion, Karl Lagerfeld, world, features a boutique in who has decorated a number of hotel rooms each room offering guests the chance to pur- to date, is set to expand his personal brand by chase a range of designs from the brand. opening his own chain of hotels, restaurants Another hotel in Milan is the Maison Moschi- and nightclubs. While, the head creative direc- no. Its rooms are lavishly decorated with 16 tor of Chanel and Fendi is set to open his six- different styles, ranging from forest settings, star hotel under the Brandmark Collective BV lamps shaped like dresses and a plethora of brand in Macau in 2019. the highest quality fabrics on display in the In Spain, Casa Camper, the hotel chain run reception area. The hotel is the perfect show- by the Spanish footwear specialists, boasts a case for high-end goods, with all items avail- total of two hotels, one in Barcelona and one able for purchase. in Berlin.

In Madrid, a standout example is the five-star Puerta de América hotel, located at Avenida de América 41. A true icon of cutting-edge de- Above: sign in Spain and around the world, each of its Christian Lacroix 12 floors was created by a renowned architect Hotel Le Petit Moulin Paris or designer, including France’s Jean Nouvel, Retailers have identified Japan’s Arata Isozaki, the UK’s Norman Fos- Right: the potential of the hotel Christian Dior ter and David Chipperfield, Iraq’s Zaha Hadid sector as a means of Suite del Hotel St. Regis and Spain’s Javier Mariscal and Victorio & diversification. New York Lucchino.

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he Parisian hotel sector is clearly investing in the luxury segment. One of the reasons for this is that operators are looking to capi- talise on Paris’ growth potential, which has The number of luxury beenT boosted by the need to refurbish several hotels hotel rooms has in order to bring their offering into line with what is significantly spiked expected by increasingly demanding overseas visi- in recent years. tors. Other factors include competition from other European destinations and the rise of new types of accommodation, such as Airbnb, which is prompt- ing hotels to seek new strategies to stand out from the crowd.

Additionally, in July 2009 France’s hotel rating sys- tem was updated, incorporating the category for exceptional five-star establishments that help to promote French culture and enhance the appeal of France as a destination. The ambition to achieve this classification has prompted many well-established hotels to invest in significant refurbishments and reno- vations.

The number of luxury hotel rooms has significantly spiked in recent years. This rise is down to newcomers Past & present – the Shangri-La in 2010, the Manda- rin Oriental in 2011 and The Penin- sula in 2014 – and the refurbishment trends: and extension of other existing hotels such as the Ritz, the Crillon, Barrière Paris Le Fouquet’s, the Bristol, the Prince de Galles and the Plaza Athénée. Many retailers have been drawn in by the openings Although it is difficult to pinpoint a clear cause-effect relationship be- of impressive luxury hotels, seeking new pitches on tween luxury hotel openings and neighbouring streets where they can showcase their retail unit rental increases, this phe- brands nomenon has been observed in sev- eral areas of Paris. For example, fol- lowing the opening of the Mandarin Oriental on Rue Saint-Honoré, rents climbed 16% above the prime rent between 2011 and 2014. Two years after the Plaza Athénée opened in 2014, rents on Avenue Montaigne grew to top the prime rent by 21%. In contrast, during the same period, rents on Boulevard Raspail fell to 15% below the prime rent af- ter the Hotel Lutetia closed for refurbishment works. However, it must be mentioned that the popularity of the Boulevard Raspail area has dwindled in recent years in general.

Left: Hotel Mandarin Oriental Paris

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M

PLACE M M CHARLES 19 M DE GAULLE M M M 5 AV. DES CHAMPS-ÈLYSÉES

13 AVENUE GEORGE V M M 3 9 18 12 M

AVENUE DE L´ ÓPERA 7 16 4 8 PLACE M 2 6 14 VENDÔME M 11 M RUE SAINT HONORÉ 10 M M AVENUE MONTAIGNE PLACE DE LA M CONCORDE 9 15

M

JARDINS DU M TROCADERO BOULEV. SAINT GERMAIN MUSEO 17 ESPLANADE DEL LOUVRE DES INVALIDES

M

M CHAMP DE MARS M M BOULEV. RASPAIL

M

M

M PRIME HIGH STREETS M M RUE DE BABYLONE 1 RUE DE SÈVRES

Fuente: Knight Frank

REFORMAS NUEVOS DESARROLLOS

1. Lutetia 6. Plaza Athénée 9. Hôtel Fauchon L’Hôtel 14. Mandarin Oriental 19. So 45 Boulevard Raspail 25 Avenue Montaigne 11 Place de la Madeleine 251 Rue Saint Honoré Champs-Elysées Opened 2018 Opened 2014 Opened 2018 Opened 2011 Opened 2022 231 rooms 208 rooms 54 rooms 178 rooms 100 rooms

7. Prince de Galles 10. Nolinski Paris 15. Shangri-La 2. Hôtel Crillon 33 Avenue George V 16 Avenue de l’Opéra 10 Avenue D’Iéna 10 Place de la Concorde Opened 2013 Opened 2016 Opened 2010 Opened 2017 159 rooms 45 rooms 81 rooms 124 rooms 8. Hôtel George V 11. Le Roch Hôtel & Spa 16. Hôtel Bulgari 3. Barrière le Fouquet’s 31 Avenue George V 28 Rue Saint-Roch 30 Avenue George V 46 Avenue George V Opened 2013 Opened 2016 Opened 2020 Opened 2017 244 rooms 37 rooms 76 rooms 81 rooms 9. Hôtel Costes 12. La Réserve Hôtel and Spa 17. Hôtel Cheval Blanc 4. Ritz Paris Rue Saint-Honoré 42 Avenue Gabriel Rue de Rivoli 15 Place Vendôme Opened 2019 Opened 2015 Opened 2020 Opened 2017 82 rooms 40 rooms 50 rooms 159 rooms 13. The Peninsula Paris 18. Kimpton 5. Hôtel Le Bristol 19 Avenue Kléber Boulevard des Capucines 112 Rue du Faubourg Saint-Honoré Opened 2014 Opened 2020 Opened 2016 234 rooms 149 rooms 190 rooms Avenida de los Campos Eliseos. Paris

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VARIATION IN HIGH STREET RENTS IN PARIS THE IMPACT OF LUXURY HOTEL OPENINGS MANDARIN ORIENTAL. 251 RUE SAINT HONORÉ RUE SAINT- HONORÉ The Hotel Mandarin Oriental, built

in 2011, has clearly been one of the YEAR MAJOR OPENINGS driving forces behind the luxury 14,000 RUE SAINT HONORÉ Dsquared2, Chloé, Moynat, Balenciaga, trend on Rue Saint-Honoré cur- RENTAL FORECAST WITHOUT HOTEL MANDARIN ORIENTAL 2012: 12,000 Tom Ford, Ports 1961 rently one of the most vibrant streets PRIME RENTAL AVERAGE 2013: Valentino, Viktor & Rolf, Dior Parfums, in Paris. Between 2012 and 2017, this 10,000 Tom Ford avenue accounted for 18% of luxury Hotel 2014: Gianfranco Lotti, Exemplaire, Lyubov openings in Paris, and a further third 8,000 opening of all openings in 2018-2019, com- 2015: Mulberry (relocation), Missoni (relocation), Tory Burch, La Prairie, 6,000 fortably ahead of Avenue Montaigne Alexander McQueen (12%) and Rue Faubourg Saint-Hon- 4,000 2016: Fendi, , Furla (relocation), Marc oré (12%). Jacobs (relocation), Paul Smith (relocation) 2,000 + 16 PERCENTAGE POINTS above prime rental growth between 2011 and 2014 2017: Dior (pop-up), Stella McCartney, 0 Christofle, David Morris, Guerlain 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (relocation) 2018: Chanel, Pucci (pop-up), Moschino (relocation), Bilionaire, Pomellato (relocation) AVENUE MONTAIGNE

16,000 AVENUE MONTAIGNE PRIME RENTS YEAR MAJOR OPENINGS

RENTAL FORECAST WITHOUT PLAZA ATHÉNÉE 2012: Chanel, Escada (relocation), Revillon LUTETIA. 14,000 PRIME RENTAL AVERAGE (relocation), Fendi (relocation) 45 BOULEVARD RASPAIL Hotel 12,000 opening 2013: Armani, Saint Laurent, Givenchy, Hôtel Lutetia closed for refurbish- Pucci (relocation) ment works in 2014, a time when the 10,000 2014: Yves Salomon, Céline (relocation) number of high-end retail openings 8,000 2015: Extensions or reforms as Jimmy in the area had begun to slow follow- Choo or Ricci ing an exceptionally active period. 6,000 2016: Dior Joaillerie, Loro Piana (relocation), Between 2010 and 2014, openings in- 4,000 Chloé (relocation) cluded Hermès and Ralph Lauren in 2017: Balenciaga, Shiatzy Chen 2010, Céline in 2011, Louis Vuitton in 2,000 + 21 PERCENTAGE POINTS 2012 and Berluti in 2013, to name but above prime rental growth between 2014 and 2016 2018: Miu Miu, Roberto Cavalli (pop-up) PLAZA ATHÉNÉE. 25 0 a few. Tenant rotation ground to a halt AVENUE MONTAIGNE 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 after the hotel closed. Reopened in 2014 as a Palace category establishment, this RUE DE SÊVRES hotel has been one of the true gems of the international hotel scene since it very first opened 12,000 RUE DE SÈVRES YEAR MAJOR OPENINGS RENTAL FORECAST WITHOUT HOTEL LUTETIA CLOSURE in 1913, boasting unique Art 2012: Paul Smith y Céline opened Deco-inspired features and 10,000 PRIME RENTAL AVERAGE in calle de Grenelle (close to surrounded by haute-couture calle Sèvres), Louis Vuitton (ampliación) boutiques. Many brands have 8,000 opted for exclusive pitches on 2013: Shang Xia, Omega, Berluti

Avenue Montaigne, in Paris’s 6,000 2014: Moncler y Salvatore Ferragamo opened in close streets prestigious Golden Triangle, Hotel closure where a range of new retail- 4,000 2015: No Openings ers have opened alongside 2016: Dsquared2 in calle de Grenelle existing retailers, who have 2,1000 2017: No Openings strengthened their networks - 15 PERCENTAGE POINTS above prime rental growth between 2014 and 2016 with flagships offering the lat- 2018: No Openings 0 est products on the market. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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What´s happening in Madrid

Madrid is at an unprecedented juncture, the positive forecasts for the future of the city have attracted investors and sparked a wave of hotel refurbishment projects

Right: Centro Canalejas Madrid, which will be home to the Four Seasons hotel

Tourism in Madrid

adrid’s wealth of historical and cul- tural heritage, extensive gardens, gastronomical delights, world-re- nowned fashion scene and vibrant Mleisure offering, make it one the top go-to tourist destinations in both Spain and Europe, convert- ing the tourism sector into one of the key drivers of the city’s economy.

Madrid ranks second in the Relative Tourism Competitiveness Monitor for Spanish Cities, as measured by Exceltur, and is also second in terms of tourist intake in Spain, behind first-placed Bar- celona. It is therefore one of Spain’s strongest cit- ies in this sector, and each year is attracting a rap- idly growing number of overseas visitors.

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TOTAL TOURIST SPEND IN MADRID DEMANDA HOTELERA EN LA CIUDAD DE MADRID POR MESES OVERSEAS TOURISTS NO. OF VISITORS

T1 T2 T3 T4 2016 2017 2018 Source: Ayuntamiento de Madrid 10,000 900,000 9,000 850,000 8,000 800,000 7,000 750,000 6,000 700,000 5,000 650,000 4,000 600,000 3,000

2,000 550,000

1,000 500,000 JAN FEB MAR APR MAY JUN JUL AGO SEP OCT NOV DIC 0 2015 2016 2017 2018

Source: IET | INE | Knight Frank Research When visiting Madrid, many tourists opt to stay one in the Salamanca district and the other in the Re- in one of the more than 200 hotels in the city. The tiro district. The opening of the Four Seasons hotel According to official sources, 2017 was a record- majority of overseas tourists that choose this type of in the Centro Canalejas will be the very first Grand breaking year, with more than 9 million tourists accommodation are European (28%), followed by Luxe hotel to be located in the Central district. Latin Americans (12%) and Americans (7%). visiting the city. During the first seven months of A trend of high quality tourism is also gaining trac- 2018, this figure rose once again – up 2.6% y-o-y The most common type of hotel within Madrid’s ex- tion, attracting tourists who have longer average – meaning this year looks set to enter the record tensive supply is the four-star category, with 5-star, stays and higher average spends. The combination books once again. 5-star Luxury and 5-star Grand Luxe categories far of all these factors is prompting some of the world’s Overseas tourists are spending more and more more exclusive, and accounting for a total of around leading hotel groups, such as Four Seasons, Marriott money in Madrid each year. In the first three 11%. The Central district is home to the lion’s share and , to home in on Spain as a location for ex- quarters of 2018, the average overseas tourist of tourist accommodation, accounting for almost pansion. spend was up 2.3% y-o-y, making Madrid the half of the hotels in Madrid. However, the city cen-

tre hasn’t traditionally been home to Grand Luxe region with the greatest average daily spend in Above: hotels, with just two hotels falling into this category, Spain – at €240 – ahead of Catalonia’s €200 VP España Design and the national average of €145. Madrid.

HOTELS BY CATEGORY HOTEL SUPPLY IN MADRID BY DISTRICT* HOTEL SUPPLY IN MADRID BY HOTEL TYPE CENTRAL DISTRICT % OF EACH HOTEL TYPE BY DISTRICT NO. OF ROOMS AND NO. OF HOTELS AS A % IN MADRID OVERNIGHT HOTEL STAYS IN MADRID NATIONAL AND OVERSEAS TOURISTS 5*GL 5*L 5* 4* 3* 2* 1* 312 1,573 691 366

100 4,214 5% 5*GL Overseas tourists 8% 9% 5,622 1% 1% National tourists 5*L 12 5* Millions 10 23% % hotels 50 4* 8 3* 6 2* 4 53% 1* 24,875 2 0

45% 31% 11% 10% 3% 1% CENTRO ARGANZU. RETIRO SALAMANCA CHAMARTÍN TETUÁN CHAMBERÍ FUENCARRAL MONCLOA 0 1999 01 03 05 09 07 09 11 13 15 2017 4* 3* 2* 5* 1* 5*L (114) (8) (10) (33) (12) (15) (20) EL PARDO (9) ARAVACA (12) NO. rooms

Source: Ayuntamiento de Madrid Source: Ayuntamiento de Madrid Source: Ayuntamiento de Madrid *Entre paréntesis el número total de hoteles en cada distrito Source: Ayuntamiento de Madrid

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Hotel openings

in Madrid 1. Gran Hotel Inglés 5* 4. Plaza de las Descalzas 5* 7. Pestana Plaza Mayor 4* 10. Four Seasons Canalejas 5*GL city centre Echegaray 8 Plaza de las Descalzas 3 Plaza Mayor 28-29 Centro Canalejas Opened april 2018 Opened end of 2019 Opened april 2019 Opened january 2019 48 rooms 180 rooms 87 rooms 200 rooms

2. Hyatt Centric 5* 5. Marriott W 5* 8. Hotel Pestana CR7 4* 11. Teatro Albéniz 5* Gran Vía 31 Carrera de San Jerónimo 9-11 Gran Vía 29 Paz 11 Opened december 2017 Opened june 2019 Opened january 2020 Opened june 2019 175 rooms 141 rooms 160 rooms N/A

3. Aloft Gran Vía 4* 6. VP España Design 5* 9. Barceló Torre de Madrid 5* 12. Riu Edificio Plaza España 4* Jacometrezo 4-6-8 Plaza de España 5 Plaza España 18 Gran Vía 84 12 Opened february/march 2019 Opened may 2018 Opened january 2017 Opened july 2019 LARGE HOTEL 139 rooms 214 rooms 256 rooms 589 rooms PROJECTS TO BE COMPLETED IN MADRID BY 2020

9

+1,200 12 NEW RECENT REFURBISHMENT PROJECTS PLAZA DE ROOMS IN ESPAÑA UPCOMING REFURBISHMENT PROJECTS 5* HOTELS RECENT NEW-BUILD PROJECTS 6 UPCOMING NEW-BUILD PROJECTS

CALLE GRAN VÍA PRIME HIGH STREETS

Nike Primark Michael Kors 3 Zara Mango Right and down: GRAN VÍA Aristocrazy PLAZA Hotel Hyatt Centric H&M DE 2 8 Madrid GRAN VÍA CALLAO Adidas New Balance

4 PLAZA DE Zara LAS DESCALZAS Mango

El Corte Inglés Pepe Jeans

CALLE DE LA MONTERA 10 Desigual Aristocrazy CALLE ALCALÁ Apple Pronovias PUERTA DEL SOL 5

Zara CALLE MAYOR 7 1

11

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UPCOMING OPENINGS

The most exclusive Four Seasons Hotel Madrid in the Canale- obliged to preserve the hall, stage, entrances new hotels in the jas Centre Madrid project. to all three levels of the theatre and its stair- cases, which will remain a fundamental part The Canalejas Centre Madrid will be home centre of Madrid of the property’s interior. to the first hotel of the prestigious Four Sea- sons brand in Spain and one of their most Hotel Marriot exclusive in Europe. 200 rooms in the very RECENT OPENINGS heart of Madrid which, together with a pre- Opposite the Centro Canalejas, the for- mium 5* service, are ready to captivate high- mer Hotel Asturias will be brought back to level international tourism. life by the hotel chain W, part of the Mar- Gran Hotel Inglés riott Starwood group. Guests will be able The project is the most important in the The city centre’s very first luxury hotel to enjoy the philosophy of W’s Whatever/ capital and will regenerate the central area – located in the heart of the Letras neigh- Whenever service, as well as the exclusive at the junction of the Calle Alcalá, Sevilla, bourhood – recently reopened thanks to Madrid W Happenings, offering both Carrera de San Jerónimo y plaza de Canale- the Hiffen Away Hotels group, specialists guests and residents the very latest in fash- jas. With the opening expected to be at the in restoring historic hotels to their origi- ion, design and music. end of 2019, the lower floors will house a 45 nal splendour. The restoration project boutique shopping gallery and the upper was inspired by the 1920s, preserving the Plaza de las Descalzas floors, 22 luxury apartments with 5* service original columns and lamps and reducing from the Four Seasons hotel and the best The building, acquired KKH Property In- the number of rooms in the hotel in order views of the city. vestors from the Fundación Montemadrid to create more spacious rooms – with the in 2016 to convert it into a luxury hotel, smallest room now comprising 27 sqm. Teatro Albéniz is located opposite the Descalzas Reales monastery, formerly the Monte de Piedad Hyatt Centric After remaining closed for a decade, the headquarters. It features a façade that dates former Albéniz theatre will be Iberostar’s This hotel, located on Gran Vía, opened to 1733 and is listed as being of Cultural In- second hotel in Madrid. Madrid’s regional as Spain’s first Hyatt Centric in a former terest. The detailed sectoral plan (plan es- government listed the theatre as a Property office building. It features a restaurant on pecial) to build a luxury hotel in this period of Heritage Interest, authorising any use for the first floor “Hielo y Carbón” (Ice and property has already been approved by the the property, as long as it was compatible Charcoal), which combines Peruvian and City Council. with the nature of the space. The owners are Spanish cuisine in an open-plan space that boasts fabulous views out onto Gran Vía. Its top floor houses its recently un- veiled rooftop terrace “El jardín de Diana” (Diana’s garden), which takes its name from a five-metre statue designed specifi- cally for this hotel.

Gran Hotel Inglés 5* VP España Pestana Plaza Teatro Albéniz Riu Edificio Four Seasons Hotel Pestana Hyatt Centric 5* Calle Design 5* Mayor 4* 5* Calle de la Plaza España 4* Canalejas 5*GL CR7 4* Calle Gran Vía 31 Echegaray 8 Plaza de España 5 Plaza Mayor 28-29 Paz 11 Gran Vía 84 Centro Canalejas Gran Vía 29

2017 2019 Above: Gran Hotel Inglés Madrid 2018 2020 Right: Marriott W 5* Plaza de las Barceló Torre Heritage Madrid Aloft Gran Vía 4* Ritz Mandarin Carrera de San Descalzas 5* Hotel Hyatt de Madrid 5* Hotel 5* Calle Jacometrezo Oriental 5*GL Jerónimo 9-11 Plaza de las Centric Plaza España 18 Calle Diego de León 43 4-6-8 Plaza de la Descalzas 3 Lealtad 5 Madrid

24 | KNIGHTFRANK.ES KNIGHTFRANK.ES | 25 RESEARCH HOTELS & RETAIL is taken as a case in point, where the open- ing of five-star hotels has sparked rental in- creases in the retail units located on streets in their vicinity, the wide range of luxury HIGH STREET RENTS IN MADRID hotels due to open in Madrid are set to drive €/SQM/YEAR prime high street rents upwards in a similar fashion.

With 12 new hotels set to open in the centre GRAN VÍA of Madrid by 2020, the number of 5-star ho- tel rooms will increase by 1,200, almost dou- 3,500 GRAN VÍA bling current supply and with an unprece- AVERAGE PRIME dented density of luxury hotels in this zone. 3,000 This is expected to drive up both the quality and quantity of tourism in the city, drawing 2,500

luxury and high-end buyers into these areas. 2,000 Using Paris once more as an example, where after many luxury hotel refurbishments high 1,500 street rental prices have risen by between 15 1,000 and 20 percentage points above the average prime rents, high street rents in the centre 500 of Madrid can be expected to follow a simi- lar pattern. We therefore expect the most 0 2005 06 07 08 09 10 11 12 13 14 15 16 17 2018 prime units in the most privileged locations to benefit most from these new hotel pro- jects. PRECIADOS

4,000 PRECIADOS 3,500 AVERAGE PRIME

3,000

2,500 Left: 2,000 Puerta del Sol Madrid 1,500

1,000

500

Variation in high 0 2005 06 07 08 09 10 11 12 13 14 15 16 17 2018 street rents The large number of luxury accommodations FUENCARRAL he best retail units on Calle Preciados that are to be have traditionally had the highest rents inaugurated in the 3,500 FUENCARRAL in Madrid, but in recent years they have Spanish capital, been overtaken by Gran Vía, Puerta del AVERAGE PRIME with enhance prime 3,000 SolT and Calle Fuencarral, given the rising number high street rents in of retailers looking for space in the city centre. 2,500 a manner similar to There are currently several retail projects under that seen in Paris. 2,000 development in the heart of the city. With many of these located on Gran Vía, they are set to raise 1,500 the profile of the street’s retail offering, and put 1,000 the high street on the radar of a number of inter- national retailer. Growing attention from inter- 500 national brands will push rents up even higher Right: 0 on these streets, however, this won’t be the only Calle Gran Vía 2005 06 07 08 09 10 11 12 13 14 15 16 17 2018 factor driving transformation in this area. If Paris Madrid

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